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Capital Markets

Exchanges open to speculation

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In Soviet Russia "speculator" was one of the worst of insults. It summed up all the pejorative associations of capitalist activity that the socialist state instilled in its citizens.

Indeed, in the 1960s, the government of Nikita Khrushchev mounted a campaign against foreign currency speculators. Suspects were arrested and sentenced to long prison sentences. But the public demanded capital punishment. A judge told Khrushchev that the law did not sanction the death penalty for currency speculation. "Who's the boss: we or the law?" Khrushchev replied.

The speculators were executed.

Who knows what Kruschev would have made of the recent explosive growth of derivatives trading in Russia.

In Russia derivatives have not entirely escaped a reputation for being a vehicle for speculators and have had a volatile history there since official trading began in 1992. Trading in FX, interest rate and equity futures grew steadily until 1998, when the Russian crisis forced the collapse of several exchanges, including the Russian Exchange, the first market in the federation to trade equity derivatives.

Alexander Balabushkin, head of business development at the RTS exchange, says: "It's not quite clear why the exchange collapsed.

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